MUMBAI: Reliance Industries (RIL) has bought out the loss-making polyester plant of Bombay Dyeing at just under Rs 300 crore, according to two people familiar with the transaction. A formal announcement is likely early next week, scripting a Bollywood-like ending to the bitter feud between the Ambani and Wadia families that own RIL and Bombay Dyeing, respectively. ET had reported on July 10 that Reliance was competing with Indo Rama and JBF Industries to buy the loss-making plant of Bombay Dyeing. “It will help reduce the debt burden on their books,” said a senior investment banker, referring to Bombay Dyeing.

An email query to RIL elicited the response that they do not wish to comment, while an email sent to Durgesh Mehta, joint MD of Bombay Dyeing, went unanswered at the time this story was being written. Mr Mehta could not be reached on his cell phone. The Wadias are said to have taken this step in order to focus on their real estate business, a distinct shift from selling textiles and petrochemicals where the company had been losing ground. Although petrochemicals and textiles contribute about two-thirds to Bombay Dyeing’s revenues, they lost more than Rs 100 crore in fiscal 2010.

The real estate division made a pre-tax profit of Rs 346.5 crore. For industry heavyweight RIL, the move will help it straddle the sector and is expected to boost its capacity above 9 lakh tonnes per annum. Analysts tracking Bombay Dyeing are of the view that much of the company’s problem started with it choosing dimethyl terephthalate (DMT) to make polyester, which is said to be the more expensive route to take. Reliance, on its part, preferred purified terephthalic acid. Duties on these goods were dynamic during the 1980s which, some say, favoured Reliance. Courtesy:ET